Bob's Gutsy Leadership Blog

Silicon Valley’s Crisis: An Emerging Lack of Trust!

Fortune Magazine recently ran an article on the growing number of examples in Silicon Valley where entrepreneurs have taken a “fake it til you make it” approach to starting a business, only to have the whole thing blow up in embarrassment. Their primary example is Theranos, the blood testing company which, after rising a huge amount of start-up funding, tanked completely after it became known that its technology seldom actually worked. The entrepreneur behind it, who was very persuasive and successful in raising funds, has been banned from owning or operating a medical lab for two years and some investors are suing.

Another example was Zenefits; the HR software startup which soon went down in flames after acknowledging that its software enabled employees to dodge state licensing requirements. The list of examples in this Fortune article is voluminous and it gives you the distinct impression that the trustworthiness of Silicon Valley deserves to be put in to question.

From a leadership perspective, these examples bring up the ago-old issue of: how do you know if you can trust an individual you are going to hire, invest in, or work with? Actually there has been decades of research on this topic. The findings show that people’s accuracy in determining trustworthiness is only slightly better than chance. On the other hand, the research verifies that the following three suggestions can be helpful in determining the trustworthiness.

1.) Remember That an Individual’s Integrity Can Vary by Circumstance – Many of us believe that people are either trustworthy or not. This is not the case and it has been verified by many psychologists doing extensive experiments. Instead, trustworthiness seems to be somewhat dependent on whether the outcome can impact them. Net, if you are trying to judge trustworthiness, think about whether the individual will be personally impacted by the outcome of the issues at hand.

2.) Beware: Confidence Can Mask Incompetence – Just because an individual seems smooth and polished doesn’t mean they are competent. Unfortunately, as confirmed by a British Columbia researcher, people are much more willing to trust individuals who look confident and dress well.

3.) Face-to-Face Personal Interactions are Helpful – Experiments at Cornell University and MIT filmed people having brief “get-to-know” conversations either face-to-face or online before they play a game involving monetary transactions and the exchange of information to improve the performance of those transactions. The individuals who had face-to-face conversations were significantly more accurate in judging trustworthiness than those that relied on online interaction.

In summary, deciding trustworthiness is a difficult task. On the other hand, the extensive research suggests the points above are certainly worth following.